Groups float plan to privatize Kansas Turnpike

? Two investment banking groups are making a pitch to sell the Kansas Turnpike.

Goldman Sachs and Citigroup have put together reports on privatizing the 236-mile tollway – essentially leasing it to investors.

The companies say the lease could net the Kansas Turnpike Authority anywhere from $300 million to $3.15 billion.

The amount of the deal would be dependent on increasing tolls on the roadway, which runs between the Kansas-Oklahoma border to near Bonner Springs.

Both companies say public-private opportunities in road transactions are becoming more attractive to governments strapped for cash, such as the lease of the 7.8-mile Chicago Skyway toll road to foreign investors in a deal worth $1.8 billion.

But Mike Johnston, president and chief executive of the Kansas Turnpike Authority, urged caution in a letter to legislators, who would have to OK any proposal for it to happen.

“When reviewing this material, it is important to keep in mind that virtually all of the “substantial value” associated with these proposals is derived from sharply higher toll rates for Turnpike customers.

“For example, in the Chicago Skyway’s case, toll rates beginning in January of 2005 will be increased to approximately a 7.93 percent annual increase each year until 2017,” Johnston said.

Sen. Les Donovan, R-Wichita, and chairman of the Senate Transportation Committee, said he would oppose any move to privatize the Kansas Turnpike.

“We have a very good system that works,” Donovan said.

Even though the state faces significant budget challenges to take care of public schools and health care, Donovan said lawmakers shouldn’t be mesmerized by promises of big bucks from the proposals.

“One-time money is not the way to go,” he said.

This is not the first time selling the turnpike has been discussed.

In 2003, some legislators suggested selling the highway as a way to provide money for the state without increasing taxes. But the idea went nowhere

A 1992 report by the Reason Public Policy Institute in California, an advocate of privatization, estimated the turnpike’s value at $900 million.